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09 July 2017

Finance Minister: Bermuda Under Threat From European Union

Royal Gazette

Bermuda’s international standing as a business destination is again under attack by the European Union, according to finance minister Bob Richards.

Mr Richards said that this month the Bermuda Government received a questionnaire from the EU’s Code of Conduct Group which he said was intended to harm the island’s position in international business.

Mr Richards said: “The questionnaire is designed to lead to a predetermined conclusion that Bermuda is a tax haven that is harmful to the global economy, and the EU in particular, and therefore should be placed on an economic blacklist.

“This, despite the fact that the Organisation for Economic Co-operation and Development and the Financial Action Task Force to combat money laundering have concluded that Bermuda is not ‘harmful’ in its conduct or the application of its laws in the global economy. The first attempt by the Code of Conduct Group to blacklist Bermuda in 2015 was thoroughly repudiated by the OECD and was dropped, but this latest attempt has been more cleverly constructed and poses a much greater threat.

“We believe it constitutes a clear and present danger to our international business sector.”

Mr Richards said that the questionnaire was received by e-mail on June 9, and if the Government fails to respond by July 7, the island will be deemed non-compliant by the organisation.

Richards said that he believed the questionnaire had been sent to multiple jurisdictions, not just Bermuda, and that the Government would be willing to release the questionnaire — and government’s response — publicly.

Mr Richards defended the island’s reputation saying Bermuda had spent a great deal of time and money to stay ahead of the curve for international taxation and information sharing, saying that the island is being used as a political scapegoat.

“Bermuda does not hide beneficial ownership from tax, regulatory or law enforcement agencies,” he said. “Bermuda does not create structures designed to obscure where income is earned. Bermuda is not the jurisdiction of choice for hundreds of thousands of multinationals seeking to create shell corporations. Other jurisdictions are.

“Scapegoating Bermuda plays well in some European countries for political reasons. It also assumes that Bermuda is weak and defenseless.

“But we are not. We will fight. We will fight this unjust attack on the livelihoods of thousands of Bermudians employed in the financial services business or those who depend indirectly on that sector for support. We will fight to preserve our sovereign right to determine tax policy for Bermudian companies.”

While he said that Brexit had reduced the UK’s influence on the EU, he said Bermuda still had “private sector partners and overseas-based friends” who will work with the island as it defends its reputation.

“Our first priority is to answer the questionnaire clearly and logically,” he said. “If there are any biases in the questions, we will point them out and propose alternatives that demonstrate our role in co-operation, transparency and reporting.

“With the questionnaire submitted by the deadline date, we will follow with a campaign enlisting the support of our contacts within the EU and elsewhere that we have built up in recent years.

“I am confident we will prevail. We have worked long and hard to establish our reputation as a jurisdiction with integrity and the highest standards of transparency and best practice.

“We will fight to protect our reputation and the livelihoods of thousands of Bermudians who rely on that reputation for their livelihoods.”